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Sunday, 5 February 2017

Whether leave to defend summary suit can be refused if affidavit is not as per requirement of law?

Besides, the affidavit filed in support of the application has been verified by maintaining that "the contents of the above affidavit are true and correct to my knowledge". This kind of omnibus statement of verification appeared to be palpably wrong for apart from legal plea, there is information relating to other firm, which cannot be passed on personal knowledge, source of information about encashment or non-encashment Cheque No. 196311 drawn on Karnataka Bank, Chandni Chowk. In ordinary course such type of affidavit should not be relied upon under Order 19 Rule 3, Civil Procedure Code unless it is stated that such cheque was received by the other firm in the presence of the deponent and it was presented to the bank in his presence and was subsequently dishonoured and he had seen the letter of the bank conveying the information about the cheque having been dishonoured. Even where allegations in an affidavit are stated to be correct to the best of the knowledge, the nature and source of knowledge must be disclosed. If the nature and source of the knowledge is not disclosed the affidavit would not be as per law (see M/s. Sukhwinder Pal Bipan Kumar 6- Ors. v .State of Punjab & Ors., MANU/SC/0071/1981 : [1982]2SCR31 ). In such circumstances it appears that the defense taken by the petitioner is as good as illusory a sham and practically a moonshine and Therefore, unconditional leave could not be granted.

IN THE HIGH COURT OF DELHI

Civil Revision Appeal No. 387 of 1991

Decided On: 01.03.1997

Daya Chand Uttam Prakash Jain and Anr.Vs.Santosh Devi Sharma

Hon'ble Judges/Coram:S.N. Kapoor, J.

(1) In this revision petition the primary question is whether a suit under Order 37, Civil Procedure Code could be filed on the basis of an "acknowledgement".

(2) The plaintiff/respondent filed a suit of recovery for a sum of Rs. 49,956.00 Along with interest on account of loan advanced and written acknowledgement of liability by the defendant.

(3) According to the case of the plaintiff, the respondent gave a statement of account indicating balance amount of Rs. 59,859.50 for the financial year 1986-87. The respondent acknowledged the same by signing it. Interest of Rs. 7,422.50 was paid in July, 1987 and Rs. 8,081.00 in April 1989 by the petitioner. The defendant made another written acknowledgement of the amount payable by it to the plaintiff showing that Rs. 75,363.00 was due against the defendant on 31 March, 1989. On demand the defendant paid Rs. 20,500.00 on 29th july, 1989 leaving a balance of Rs. 42,927.50. The petitioner claimed this amount Along with interest at the rate of 18 per cent from 29 July, 1989 till 30th June, 1990 and filed a suit under Order 37, Civil Procedure Code

(4) The acknowledgement has not been disputed by the petitioner/defendant except by barely saying that the petitioner has filed the present suit on false documents. The learned Counsel for the petitioner Mr. G.L. Rawal has challenged the impugned order dismissing application of leave to defend and decreeing the suit on the ground that the suit on the basis of acknowledgement is not maintainable under order 37, CPC. The learned Additional District Judge did not consider the objections on merits about the payments made by the defendant/ petitioner to third party on behalf of the plaintiff/respondent.

(5) As regards first contention, learned Counsel for the petitioner contends on the basis of Shri J.S. Sood v. Mrs. Premlata Mehta &Anr., 1984 (2) (Del) 761 that suit under Order 37, Civil Procedure Code is not maintainable on the basis of an acknowledgement.

(6) 6. Before proceeding further it would be relevant to reproduce Rule 1 of Order 37, Civil Procedure Code It reads asunder:

"Subject to the provisions of Sub-section (1), the Order applies to the following classes of suits, namely :

(A)suits upon bills of exchange, Hundies and promissory notes;(B)suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest arising-

(I)on a written contract; or(II)on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or(III)on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only."

(7) In this light it is required to be seen whether the present suit relates to recovery of "Debt" arising out of a "written contract" or not?

(8) BLACK'S Law Dictionary (6th Ed.) defines "Debt" as under :

"A sum of money due by certain and express agreement. A specified sum of money owning to the person from another, including not only obligations of debtor to pay but right of creditor to receive and enforce payment". State v. Ducey, 25 Ohio App. 50, 266 N.E. . 233. Liability on a claim. Bankruptcy Code $ 101.A fixed and certain obligation to pay money or some other valuable thing or things, either in the present or in the future. In a still more general sense, that which is due from one person to another, whether money, goods or services."

(9) In Food Corporation of India v. BalKishn Garg, MANU/DE/0208/1981 : 21(1982)DLT167 , a Division Bench of this Court considered the requisites of debt in connection with the suit for recovery of the price of goods. It was held to be maintainable under Order 37, Civil Procedure Code by treating the unpaid price as debt. In regard to "Debt" following observations of the Division Bench of this Court in para 7 are relevant here

" 7. What there is a debt? Relying in Webb. v. Stenton, (1883) 11 Qbd 518it was held in Commissioner of Wealth Tax v. Pierce Leslie & Co. Ltd., MANU/TN/0123/1963 : [1963]48ITR1005(Mad) , that the essential requisites of a debt are, (1) an ascertained or readily calculable amount; (2) an absolute unqualified and present liability in regard to the amount with the obligation to pay forthwith or in future within a time certain; (3) the obligation must have accrued and be subsisting and should not be that which is merely accruing. A contingent liability or a contingency debt is, Therefore, neither a liability nor a debt. A debt is a 'debitum in present ,solvendum in future. We, Therefore, hold, that the amount covered by the suit is an ascertained amount payable liability. The obligation has accrued and subsists. It is a debt accruing under a written contract".

(10) The term "written contract" in the words of Black's Law Dictionary (6th Ed.) means as under :

" A. "written contract" is one in which all its terms is in writing". Commonly referred to as a formal contract."

11.1. According to Black's Law Dictionary an "acknowledgement" means as under:

" TO" acknowledge "is to admit, affirm, declare, testify, avow, confess or own as genuine, Favello v. Bank of America Nat. Trust & Savings Ass'n,24CalApp. 342, 74 P. 1057. Admission or affirmation of obligation or responsibility. Weyerhaeuser Timber Co. v. Marshall, C.C.A. Wash., 102 F. 78. (sic.) states have adopted the Uniform Acknowledgement Act.THE debtor's acknowledgement of the creditor's debt and or right of action that will revive the enforceability of a debt barred by the statute of limitations. Part payment of obligation which tolls statute of limitations is a form of "acknowledgement of debt". In re: Badger's Estate, 156 Kan. 734.37 P. 198."

(11)

11.2. According to stroud's Judicial dictionary acknowledgement means as under:

(1),"an acknowledgement, in writing of a debt......so as to take such debt out of the Limitation Act.....(1) must admit that debt is due, and (2) promise, or justify the inference of promise, of payment unconditionally, or (if conditionally) it must be shown that the condition has been accomplished.... A statement in a balance sheet presented to a creditor-shareholder of a Company and signed by the Directors or their agents is sufficient acknowledgement (Jones v. Bellgrove Properties, 1949) 2 K.B. 700, and an acknowledgement is within the section if it indicates that a debt is due, even if it does not state the amount (Dungate v. Dungate, (1965) 1 W.L.R. 1577. But a signature on a balance sheet, notwithstanding that the debt appeared therein, was held not to be a sufficient acknowledgement (Consolidated Agencies v. Bertram, (1965) A.C. 470. An acknowledgement by one of the several executors suffices (Re Macdonald [1897] 2 Ch. 181, distinguishing Tullick v. Dunn, Ry. & Moo. 416, and Scholey v. Walton, 13 L.J. Ex. 122; see Astbury v. Astbury, infra). "Acknowledges the claim" (Section 23(4) means "acknowledges the debt or other liquidated pecuniary amounts" (Good v. Parry, [1963] 2 W.L.R. 846. "Acknowledgement" (Section 24(1) means acknowledgement of liability.... -. "(2)"An acknowledgement of a Deed, or Speciality, by writing or part payment or part satisfaction (Civil Procedure Act, 1833 (c. 42), Section 5 will suffice if it contains a clear admission of the speciality debt (see Moodie v. Bannister, 28 L.J. Ch. 881; Howcutt v. Bonser, 3Ex. 499; Forsyth v. Bristowe, 8 Ex. 721, [See also Read v. Price (1909) 1 K.B. 7; affirmed(1909) 2 K.B. 724, cited Party Liable, where it was held that parole evidence is admissible to prove the contents of a written acknowledgement which has been lost; see now Limitation Act, 1939, Sections 23,24. As to acknowledgement is writing within Civil Procedure Code, 1908, Section 5 see Viscount Burnham v. Atlantic & Pacific fibre Importing & Manufacturing Co. Ltd., 44 T.L.R. 702.

"Their Lordships think that what has been forgotten is that there are two forms of account stated. An account stated may only take the form of a mere acknowledgement of a debt, and in those circumstances, though it is quite true it amounts to a promise and the existence of a debt may be inferred, that can be rebutted, and it may very well turn out that there in no real debt at all, and in those circumstances there would be no consideration and no binding promise.But on the other hand, there is another form of account stated which is a very (stc.) form as between merchants in business in which the account stated is an account which contains entries on both sides, and in which the parties who have stated the account between them have agreed that the items on one side should be set against the items upon the other side and the balance only should be paid; the items on the smaller side are set off and deemed to be paid by the items on a larger side, and there is a promise for good consideration to pay the balance arising from the fact that the items have been so set off and paid in the way described."

Their Lordships were further of the view that :

"That was done. The man writes an account which was demanded by the servant for the express purpose of knowing what sum he would be entitled to get and which, it seems to their Lordships, was stated by the Managing Partner of the business, for the sole purpose of enabling the servant to know what his final remuneration was to be. To make quite clear that it was intended to express something in the nature of an obligation he authenticated the document and that can be the only effect of that particular part of the transaction - by writing his signature over two 10 cent stamps.In their Lordships' view, that was a plain case of a promise made to pay the balance for a good consideration. One cannot help thinking that if an account stated in those circumstances did not give rise in Kenya to the promise to pay, and for a good consideration, Kenya would be certainly without one of the most ordinary business facilities which has been common to everybody who carries on business under any system which incorporates any of the ordinary principles of English contract law."

"(12).....Where the accounts contain a series of cross-entries, one evidencing payment of loans advanced at various times by the creditor and the other evidencing payment of amounts paid towards the same loans at various times by the debtor, and the parties agree to set one series of entries against the other & after doing the same, finally arrive at an agreed balance, the final settlement of accounts thus made constitutes an "account stated."

That fact that both the entries relate to the same transaction of loan does not take the transaction out of the category of "account stated", nor does it make the transaction a unilateral one. Such a transaction is really a bilateral one as both the parties have met together and after mutual accounting in respect of the advances made by the one and payments made by the other have finally agreed by a joint application of their minds to treat a certain specific figure as the amount due on that date. Both the parties participating in this transaction have combined in finally adjusting their rights.

They have jointly co-operated in wiping off their previous or antecedent rights and liabilities and substituting Therefore a new or a fresh right and liability. The procedure of surrender and discharge involved in such a transaction for the purpose of arriving at an agreed settlement is truly a bilateral one. The process of "give and take" which such a transaction demands from either side, itself constitute a sufficient consideration which is enough to sustain the fresh agreement as valid in law.

Reference in this connection might be made to the case of Bishnu Chand v. Girdhari Lal MANU/PR/0029/1934 in which their Lordships of the Privy Council have expounded the law in this regard. Then such an "account stated" is signed by the party sought to be made liable or its duly authorised agent, the "account stated" as envisaged in Art. 64 is created. Such an "account stated" gives rise to a new cause of action and a suit broughtwithin three years of the date of such a cause of action is not barred by limitation. Such a suit cannot be thrown out on the ground that some of the items antecedent to the date of the "account stated" were barred by limitation.

Previous rights and liabilities having been swept away by the concerted and agreed Will and action of parties themselves, the previous items which formed the material for arriving at the agreed figure must, for the purposes of the suit, be eliminated from consideration, and a fresh cause of action be deemed to be born on the date on which such a transaction is entered into. In such a situation, it is not open to the Court to reopen the closed transaction and to scrutinize the antecedent entries for the purpose of applying the bar of limitation. Such a procedure would be the very negation of the real purpose of "account stated" and would constitute a violation of fundamental principles underlying the legal doctrine of "account stated".

IN the present case, there is also no manner of doubt that this "account stated" was signed by a partner of the firm. Every partner of a firm has in law an inherent right to do it, and must, Therefore, be presumed to act as such."

" 15. In construing this letter it would be necessary to bear in mind the general tenor of the letter considered as a whole. It is obvious that respondent 2 was requesting respondent I to avoid the sale as he did on an earlier occasion in November, 1931. The previous incident shows that when the property was put to sale by the first mortgagee the mortgagor rushed to the second mortgage to stop the sale, and this obviously was with a view to persuade the second mortgage to prevent the sale which would otherwise affect his own interest as such mortgagee. The theory that the letter refers to the interest of respondent 1 as an intending lessee or purchaser is far fetched, if not absolutely fantastic. Negotiations in that behalf had been unsuccessful in 1926 and for nearly five years thereafter nothing was heard about the said proposal. In the context it seems to us impossible to escape the conclusion that the interest mentioned in the letter is the interest of respondent I as a puisne mortgagee and when the said letter appeals to him to take up the whole it can mean nothing other than the whole of the mortgagee's interest including the interest of the prior mortgagee. An appeal to respondent 1 to stop the sale on payment of Rs. 10,000.00 as he infact had stopped a similar sale in November 1931, is an appeal to ensure his own interest in the security which should be kept intact and that can be achieved only if the threatened sale is averted. We have carefully considered the arguments urged before us by the learned Attorney- General but we see no reason to differ from the conclusion reached by the Court of Appeal below that this letter amounts to an acknowledgement. The tenor of the letter shows that it is addressed by respondent 2 as mortgagor to respondent 1 as puisne mortgagee, it reminds him of his interest as such mortgagee in the property which would be put up for sale by the first mortgagee, and appeals to him to assist the avoidance of sale, and thus acquire the whole of the mortgagee's interest. it is common ground that no other relationship existed between the parties at the date of this letter, and the only subsisting relationship was that of mortgagee and mortgagor. This letter acknowledges the existence of the said jural relationship and amounts to a clear acknowledgement under Section 19 of the Limitation Act. It is conceded that if this letter is held to be an acknowledgement there can be no other challenge against the decree under appeal "

11.6. In Hiralal & Ors. v. Badkulal & Ors, MANU/SC/0004/1953 : [1953]4SCR758 , it is true to find that "Defendant H who was in mutual understanding with the plaintiff signed an entry in the plaintiff's Khata on which earlier mutual account had been entered to the following effect : "Rs. 34.000.00 balance due to be received up to Bhadon Sudi 11 Sam. 2000 made by check and understanding to accounts with his books. The acknowledgement was signed by H with the following endorsement. After adjusting the accounts Rs. 34,000.00 found correct and payable. The plaintiff brought a suit on the basis of the entry for recovery of the amount. The Supreme Court observed in para 11 as under :

" 11. Mr. Bindra next urged that the plaintiff 's suit should have been dismissed because it could not be maintained merely on the basis of an acknowledgement of liability, that such an acknowledgement could only save limitation but could not furnish a cause of action on which a suit could be maintained. The Judicial Commissioner took the view that an unqualified acknowledgement like the one in the suit, and the statement of the account under which the entry had been made, were sufficient to furnish a cause of action to the plaintiffs for maintaining the present suit. We are satisfied that no exception can be taken to this conclusion. It was held by the Privy Council in Maniram v. Seth Rupchand, 33 Ind. App. 165 (C) that an unconditional acknowledgement implies a promise to pay because that is the natural inference if nothing is said to the contrary. It is what every honest man would mean to do. In Fateh Mahomed v. Ganga Singh, Air 1920 Lah. 264, the same view was taken. It was held that a suit on the basis of a balance was competent. In Kahanchand Dularam v. Dayaram Amritlal, Air 1929 Lah. 263 , the same view was expressed and it was observed that the three expressions "balance due", "account adjusted" and "balance struck" must mean that the parties had been through the account. The defendant, there accepted the statement of account contained in the plaintiff's account book, and made it his own by signing it and it thus amounted to an "accounts stated between them" in the language of Art. 64, Limitation Act. The same happened in the preset case. The acknowledgement which forms the basis of the suit was made in the ledger of the plaintiffs in which earlier mutual accounts had been entered and truly speaking, the suit was not based merely on this acknowledgment but was based on the mutual dealings and the accounts stated between them and was thus clearly maintainable."

(12)

12.1. ln Mrs. Sushila Mehta v. Shri Bansi Lal Arora & Anr., (1982) 1 Del 320,the plaintiff paid the allocation money of Rs. 1,00,000.00 for allotment of shares. The defendants accepted the payment as allocation money. The payment, its acceptance and the receipt thereof issued by the defendants held to constitute a written contract for the purposes of Order 37 Rule 1. It was observed that though it may be labelled as receipt but that does not meant that it is not a contract. In paras 10 & 11 it was further observed as under :

" 10. The question is whether the receipt dated 26th August, 1978 is a "written contract" or not. In my opinion it clearly is. The plaintiff paid the application money of allotment for shares. The defendants accepted it, though it is true that defendant No. 2 came into existence a few months later. The payment of Rs. 1,00,000.00 by the plaintiff as application money and its acceptance by the defendants constitutes a contract. It may be labelled as a receipt but that does not mean that it is not a contract.11. It was said that it has not been pleaded that the suit is based on a written contract. This is not required by any provision of law. The Court has to find out whether the suit has been brought upon a negotiable instrument or a written contract or an enactment should guarantee to which Order 37, Civil Procedure Code applies. The acknowledgement of Rs. 1,00,000.00 by the defendants for the purposes allotment of shares as application money Therefore clearly amounts to a contract. Because it is their own case that the plaintiff paid allotment of shares and they accepted it. There was "consensus of mind". And "consensus of mind" leads to a contract, as Lord Cairns said. (Cundy v. Lindsay, (1878) 3 A C 459 . There was promise. There was consideration. There was acceptance. All the elements essential for the formation of the contract are present. What more is needed to make a contract. It was not a nudum pactum."

A suit under Order 37 Rule 1, Civil Procedure Code was filed by the plaintiff alleging that the plaintiff paid Rs. 1,00,000.00 to defendant No. 1 as application money for shares in a proposed private limited company. Receipt of the amount was not disputed by the defendants but Rs. 20,500.00 was stated to have been transferred to some. other account on instructions of the plaintiff. The defendant applied for leave to defendant under Order 37 Rules 3 & 5, Civil Procedure Code alleging that the suit was not maintainable under Order 37 as the same has not been instituted on the basis of Negotiable Instruments Act or a written contract. In this regard the above Paras 10 & 11 of the judgment are worth reading.

12.2. An incidental question is "Whether such an agreement should be signed by both the parties?" It is not necessary that written agreement should be signed by both the parties. If any authority is needed one may refer to jugal Kishore v. Goolba Hormusji (S), MANU/SC/0006/1955 : [1955]2SCR857 . In this case Venkatarama Ayyar, J. observed as under:

" 7. But it is settled law that to constitute an arbitration agreement in writing it is not necessary that it should be signed by the parties, and it is sufficient if the terms are reduced to writing and the agreement of the parties thereto is established".

In Sushila Mehta (supra) receipt which was taken to be written contract was not signed by both the parties. It was signed by defendant No. 1 Bansi Lal Arora only.

12.3. In this regard one may also refer to Seth Banarsi Das v. Cane Commissioner, MANU/UP/0239/1956 : AIR1956All725 . In the construction of a written document, it is legitimate in order to ascertain their true meaning if that be doubtful, to have regard to the circumstances surrounding the creation of the subject matter to which it was designed and intended that it should apply. It must be seen what is the intention expressed by the words used; but whether the language is imperfect, and it is impossible to know what the intention is without enquiring further, the circumstances with reference to which the words were used should be looked. The contract must be construed as a whole and the intent of the parties must be ascertained from the documents as a whole.

12.4. In jiwibai v. Rarnkunwar Shriniwas Murarka Agarwala, Air (34) 1947 Nag 17, a Full Bench of the Nagpur High Court took the view that the express authority given to the agent to 'compromise' under Mukhtarnama included the power to refer the suit to arbitration because the deed set out in separate phrases the two aspects of 'compromise' which the single English word normally connoted. It may further be added that document embodying a business agreement should be construed formally and broadly and there must in such documents imply a term which will give such business efficacy to the transaction as must have been intended by the parties. One cannot add to a contract an implied term inconsistent with or which contradicts express terms of the contract. But in a suitable case one may imply a term if it is necessary to give it a business efficacy (see Gulabchand Gambhirmal v. Kudilal Govindram & Anr., MANU/MP/0052/1959 : AIR1959MP151 [Full Bench], Cholldhri Gulabchand Jain v. Bhama, MANU/MP/0014/1972 : AIR1972MP54 ).

(13) A Single Bench of this Court in j.S. Sood (supra) took the following view in para 12 p. 724 :

" 12. As to whether the written contract may be signed by both the parties does not call for decision in the present case though it appears that the words "written contract" envisage some sort of a formal document between the contracting parties. I would rather think that it would be a condition precedent that there should be a formal agreement executed by the parties and signed by them. plaintiffs own version is that it was a verbal contract and the document on the basis of which the suit has been filed merely acknowledges the money due under the aforesaid verbal contract. Such a writing may at best be a written acknowledgement which extends the period of limitation under Section 18 of the Limitation Act, 1963, but no more. Thus, I do not think that such a document would fall within the definition of written contract and the provision of Order xxxvii would not apply. It must, Therefore, be held that the present suit is not maintainable under the summary procedure prescribed under Order xxxvII."

If the judgment of the Single Judge is seen in the light of what has been said above it may appear that the aforesaid case was decided on the basis of the pleadings in that case to the effect that it was verbal contract and the case law referred to above was not brought to the notice of the learned Single Judge.

(14) In the instant case 'statement of account', for the assessment year 1986-87 dated 21st October, 1987 indicated that on 1st November, 1986 there was an outstanding balance of Rs.50,422.00 payable to Smt.Santosh Sharma, Rs.8,437.00 had accrued as interest up to 21st October, 1987. Thus, a balance of Rs. 59,856.40 was mentioned as 'baki jama raha'. It is signed by Naveen Kumar, one of the partners of Dayachand Uttam Prakash. Similarly, for the assessment year 1989-90 'statement of account' of Smt. Santosh Sharma from 22nd October, 1987 to 31st March, 1989 was given and it indicated a balance of Rs. 59,854.50p" interest up to 6th June, 1988 amounting to Rs. 7,422.00 and Rs. 8,081.00 up to 31st March, 1989 had also been shown. to be payable in the 'statement of account'. On 6th July, 1988 Rs. 7,422.50p. were given and Rs. 67,940.50p. was shown as 'bakijama raha' on 31st March, 1989. This account was signed by Sh. Naveen Kumar, partner. If one goes by the judgment of the Privy Council in Elvira Rodrigues (supra) this is second kind of account stated as it is very usual form between merchants in business in which the account stated is a kind which contains entries on both sides and in which the parties, who have stated the account between them, have agreed that the items on one side should be set aside against the items upon the other side and the balance only should be paid and there is a promise for good consideration to pay the balance arising from the fact that items have been so said and paid in the way described. It was intended to express the same in the nature of obligation. The partner of the fire authenticated the document. It may further be noted that the interest was also paid in the light of acknowledgement and the promise to pay. It should amount to novation of the earlier contract and the acknowledgement being in writing and signed by the partner of the firm, it has to be treated as written contract. It appears to me that suit on the basis of written acknowledgement of a pre-existing debt being a written contract could form a basis for recovery of an existing debt based on the said written contract in the shape of written acknowledgement. In view of the observations in Food Corporation of India v. BalKishan Garg, (supra) the amount of the debt had been ascertained between the parties and the interest is also readily calculable amount in view of the past conduct of the parties. The acknowledgement was of a pre-existing debt. The purpose of giving this written acknowledgement implies in it an absolute unqualified present liability with an obligation to repay it in future on the understanding that the creditor need not file a suit immediately. Consequently, the written acknowledgement surely falls under the term "written contract" and the parties had consensus of mind when this written acknowledgement was signed by one of the partners of the petitioner firm. There was a promise. There was consideration. There was acceptance. All the elements essential for the formation of a written contract were present. Nothing more is required in this acknowledgement to make it a written contract. Accordingly, I am of the definite opinion that the present suit has been filed on the basis of a "written contract" for the recovery of the existing debt on the basis of this "account stated" and case on the basis of said written contract in the shape of written acknowledgement is certainly maintainable under Order 37, CPC.

(15) As regards the granting of leave to defend, the defendant though specifically not denied the written acknowledgement but alleged that the case of the plaintiff was based on false document and the claim was barred by time. There is yet another plea taken by the defendant relating to the claim of adjustment of Rs. 35,000.00 . According to the defendants, on July 1989, the husband of the plaintiff who was employed with the defendant, resigned from the service of the defendants/ petitioners in November 1989. The husband of the plaintiff wanted to start cloth shop at Jaipur and on his request petitioner/respondents sold goods worth Rs. 40,000.00 to the husband to the plaintiff and allowed the plaintiff to purchase further goods worth Rs. 41,341.00 from M/s. Paras Nath Textiles on 1st December, 1989 on their guarantee. The plaintiff issued a cheque of Rs. 6,341.00 as for payment to M/s. Paras Nath Textiles and allowed the applicants to adjust the outstanding amount against credit of Rs. 35,000.00 . The plaintiff gave an undertaking to the applicant that the plaintiff would pay the balance amount of Rs. 35,000.00 to M/s. Paras Nath Textiles herself and in case of any failure on her part, the applicant/ defendants would pay the said amount of Rs. 35,000.00 to M/s. Paras Nath Textiles on behalf of the plaintiff. Thus, the outstanding amount stand exhausted on failure of the plaintiff to pay the said amount of Rs. 35,000.00 since the said Cheque No. 196311 could not be encased by M/s. Paras Nath Textiles. They also raised the demand of Rs. 35,000.00 and the petitioner/defendant had paid the amount of Rs. 35,000.00 to M/s. Paras Nath Textiles as per undertaking. The application is supported by affidavit of Sh. Naveen Kumar, partner of the defendant-firm'.

(16) It is further notable that before filing this suit a legal notice was given. The payments up to 29th July, 1989 have not been disputed. Simply it has been stated that they are matters of record. Moreover, there is virtual admission of the liability, it is sought to be adjusted by alleging an oral agreement of standing surety for cloth sold to the husband of the plaintiff and payment of Rs. 35,000.00 to M/s. Paras Nath Textiles without alleging date and mode of payment either in para 5(e) in which payment is alleged or in any other paras of the application for leave to defend. It is disputed by the other side on affidavit and certain contradictions have also been pointed out in the stand in this case and the plea in suit filed subsequently and numbered as 169/90. Besides, the affidavit filed in support of the application has been verified by maintaining that "the contents of the above affidavit are true and correct to my knowledge". This kind of omnibus statement of verification appeared to be palpably wrong for apart from legal plea, there is information relating to other firm, which cannot be passed on personal knowledge, source of information about encashment or non-encashment Cheque No. 196311 drawn on Karnataka Bank, Chandni Chowk. In ordinary course such type of affidavit should not be relied upon under Order 19 Rule 3, Civil Procedure Code unless it is stated that such cheque was received by the other firm in the presence of the deponent and it was presented to the bank in his presence and was subsequently dishonoured and he had seen the letter of the bank conveying the information about the cheque having been dishonoured. Even where allegations in an affidavit are stated to be correct to the best of the knowledge, the nature and source of knowledge must be disclosed. If the nature and source of the knowledge is not disclosed the affidavit would not be as per law (see M/s. Sukhwinder Pal Bipan Kumar 6- Ors. v .State of Punjab & Ors., MANU/SC/0071/1981 : [1982]2SCR31 ). In such circumstances it appears that the defense taken by the petitioner is as good as illusory a sham and practically a moonshine and Therefore, unconditional leave could not be granted. This case is covered by the principles laid down for 5th category of cases in M/s. Mechalec Engineer & Manufacturers v. Basic Equipment Corporation, Mr 1977 S.C. 577.

(17) It may be mentioned that the revision petition would be maintainable though decree has also been passed in this case in terms of decision of this Court in M/s. Skylark Motors India and Others v. Lakshmi Commercial Bank Limited, Civil Revision No. 65/85 decided on 3rd July, 1996 and Siri Krishan Bharadwaj v. Manohar Lal Gupta, MANU/DE/0017/1977 : AIR1977Delhi226 .

(18) For the foregoing reasons the impugned order dated 22nd April, 1991 rejecting the application of the petitioner for leave to defend and decreeing the suit is hereby set aside subject to the condition that the petitioner furnishes Bank guarantee for the decretal amount calculated till today within a period of four weeks from the date of this order. In case of failure to do so, the revision petition shall stand dismissed.

(19) A copy of this order be sent to the concerned Additional District Judge through learned District Judge for information and for proceeding further in accordance with law in case the petitioner furnishes the Bank guarantee as mentioned above.

(20) In case the Bank guarantee is not furnished within four weeks from the date of this order the plaintiff would be entitled to pursue her execution application.